Subject: Introduction of choice of Pension Funds and Investment Pattern in Tier-I of NPS for Central Government subscribers – reg.

Reference is invited to the Gazette
Notification F.No.1/3/2016-PR dated 31st January, 2019 issued by
Ministry of Finance, Department of Financial Services, modifying
Ministry of Finance’s Notification No. 5/7/2003-ECB dated 22nd December,
2003, based on the Government’s decision on the recommendations of a
Committee set up to suggest measures for streamlining the implementation
of National Pension System (NPS).

2. Accordingly, it has been decided to introduce the following options for Central Government subscribers:

(i) Choice of Pension Fund:
As in the case of subscribers in the private sector, the Government
subscribers shall also be allowed to choose any one of the pension funds
including Private sector pension funds They could change their option
once in a year. However. the current provision of combination of the
Public-Sector Pension Funds will be available as the default Option for
both existing as well as new Government subscribers.

(ii) Choice of Investment pattern: The following options for investment choices shall be offered to Government employees:

(a) The existing scheme in which funds
are allocated by the PFRDA among the three Public Sector Undertaking
fund managers based on their past performance in accordance with the
guidelines of PFRDA for Government employees shall continue as default
scheme for both existing and new subscribers.

(b) Government employees who prefer a
fixed return with minimum amount of risk shall be given an option to
invest 100% of the funds in Government securities (Scheme G),

(c) Government employees who prefer higher returns shall be given the options of the following two Life Cycle based schemes:

The subscribers may exercise one of the above choices of Investment Pattern twice in a financial year.

(iii) Implementation of choices to the legacy corpus:
Transfer of a huge legacy corpus of more than Re 1 lakh crore in
respect of the Government sector subscribers from the existing Pension
Fund Managers is likely to impact the market. It may be practically
difficult for the PFRDA to allow Government subscribers to change the
Pension Funds or investment pattern in respect of the accumulated
corpus, in one go. Therefore, for the present, change in the Pension
Funds or investment pattern is allowed in respect of incremental flows
only.

(iv) Transfer of legacy corpus in a reasonable time frame:
PFRDA shall draw up a scheme in due course for transfer of accumulated
corpus as per new choices of Government subscribers in a reasonable time
frame of say five years. Once PFRDA draws up this scheme, change in the
Pension Funds or investment pattern shall be allowed in respect of the
accumulated corpus in accordance with that scheme.

3. For investment option as per para 2
(ii) (a) above, all other terms and conditions as contained in the
investment guidelines issued by the Authority dated 03_03.2015 for NPS
Schemes (Applicable to Scheme CG, Scheme SC, Corporate CG and NPS Lite
Schemes and APY) and subsequent amendments made thereto shall be
applicable. Further, for investment options as per para 2 (ii) (b) or 2
(ii) (c) (A) or 2 (ii) (c) (B) above, all other terms and conditions as
contained in the investment guidelines issued by the Authority dated
04.05.2017 in respect of NPS schemes {Other than Govt. Sector (CG &
SG), Corporate CGI NPS Lite and AP Y} and subsequent amendments made
thereto shall apply.

4. This circular is issued in exercise
of powers of the Authority under sub-clause (b) of sub-section (2) of
Section 14 read wtth Section 23 of the PFRDA Act, 2013 and sub-
regulation (1) of Regulation 14 of the PFRDA (Pension Fund) Regulations,
2015.